MichaelS56 (Minnesota)
Posts: 859
Posts: 859
Posted:
What are the determining factors that a Board should look at when deciding on the type of Association insurance coverage? Should it be walls out or all in coverage?
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Association Master Insurance Poiicy
Started by MichaelS56 • 6 replies • 363 views
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MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
Need more details of how HOA is set up. Someone used this a good example. (Thank you). If this is a condo, then think of it as a "box". You turn that box upside down and what falls out is on the owner's insurance/responsibility. What doesn't shake out is most likely on the HOA's master insurance.
Now you need to also factor in the need for board liability coverages. Your documents may dictate how much coverage to carry. Ours is a Million dollar policy. Do you have anything outside like amenities? A pool, tennis courts, clubhouse or other structures? Will need to have them with coverages.
Our HOA insurance they come in "bundles". Meaning they include a variety of coverages all in one. You can't pick and choose what you want. We had no car in our HOA but we had coverage for a HOA vehicle. However, what could happen if I was in a car accident doing HOA business (Going to accountant office across town) I could make a claim as a board member/officer. This most likely would never happen but the coverage didn't make much sense otherwise.
Be aware of what replacement costs would be on items before deciding. Like our clubhouse was only 80K if it was to burn down. Today's prices that would not be enough to replace. We'd need around 100K. So the HOA would have to cough up the other 20K out of it's budget after the deductible to rebuild.
Now you need to also factor in the need for board liability coverages. Your documents may dictate how much coverage to carry. Ours is a Million dollar policy. Do you have anything outside like amenities? A pool, tennis courts, clubhouse or other structures? Will need to have them with coverages.
Our HOA insurance they come in "bundles". Meaning they include a variety of coverages all in one. You can't pick and choose what you want. We had no car in our HOA but we had coverage for a HOA vehicle. However, what could happen if I was in a car accident doing HOA business (Going to accountant office across town) I could make a claim as a board member/officer. This most likely would never happen but the coverage didn't make much sense otherwise.
Be aware of what replacement costs would be on items before deciding. Like our clubhouse was only 80K if it was to burn down. Today's prices that would not be enough to replace. We'd need around 100K. So the HOA would have to cough up the other 20K out of it's budget after the deductible to rebuild.
Former HOA President
CathyA3 (Ohio)
Posts: 6,299
Posts: 6,299
Posted:
I'm assuming you're in condos rather than single-family homes in an HOA.
First tip: look in your governing documents. My Declaration has a section on Insurance, and it states that we must carry all-included insurance. The section also lists other types of insurance, such as D&O, fidelity (aka employee dishonesty) and workers comp. Finally the section specifies the minimum amount required for the fidelity insurance (based on our annual income and/or the amount in our reserve accounts).
I'm assuming that your governing docs will have something similar.
General advice:
* Don't skimp.
* If your association uses volunteers or has paid employees, you need workers comp or similar insurance. One uninsured visit to the ER can wipe out an association.
* Deductibles have been rising in recent years - due mostly to the high number of claims resulting from extreme weather events. Average deductibles for condo associations were in the range of $10K to $20K last time I looked.
* You can manage your premiums to some extent by limiting your claims. Numerous small claims can result in high premiums or becoming uninsurable altogether. If we had an insurable event that came in close to our deductible, we'd just pay it.
* Be sure to make the annual certificate of insurance available to homeowners without making them ask for it (web site or newsletter or something). Typical HO6 policies that homeowners carry need to cover the association's deductible or they'll be out of pocket if there is an insurable event, so they need to know what this amount is and if it changes.
First tip: look in your governing documents. My Declaration has a section on Insurance, and it states that we must carry all-included insurance. The section also lists other types of insurance, such as D&O, fidelity (aka employee dishonesty) and workers comp. Finally the section specifies the minimum amount required for the fidelity insurance (based on our annual income and/or the amount in our reserve accounts).
I'm assuming that your governing docs will have something similar.
General advice:
* Don't skimp.
* If your association uses volunteers or has paid employees, you need workers comp or similar insurance. One uninsured visit to the ER can wipe out an association.
* Deductibles have been rising in recent years - due mostly to the high number of claims resulting from extreme weather events. Average deductibles for condo associations were in the range of $10K to $20K last time I looked.
* You can manage your premiums to some extent by limiting your claims. Numerous small claims can result in high premiums or becoming uninsurable altogether. If we had an insurable event that came in close to our deductible, we'd just pay it.
* Be sure to make the annual certificate of insurance available to homeowners without making them ask for it (web site or newsletter or something). Typical HO6 policies that homeowners carry need to cover the association's deductible or they'll be out of pocket if there is an insurable event, so they need to know what this amount is and if it changes.
CathyA3 (Ohio)
Posts: 6,299
Posts: 6,299
Posted:
Quote:
Posted By MelissaP1 on 12/13/2020 8:01 AM
... snip...
If this is a condo, then think of it as a "box". You turn that box upside down and what falls out is on the owner's insurance/responsibility. What doesn't shake out is most likely on the HOA's master insurance.
... snip...
If this is a condo, then think of it as a "box". You turn that box upside down and what falls out is on the owner's insurance/responsibility. What doesn't shake out is most likely on the HOA's master insurance.
This applies only to all-included insurance!!!
JohnC77 (California)
Posts: 562
Posts: 562
Posted:
When I send out bids to insurance companies, they will only go to companies that specialize in HOA's. Each of them require a full set of governing documents to see what the association is responsible for, They will look at the insurance section of the CCRs' to match its language with the requirement f state statues.
Your governing documents and state statutes will dictate the amount of coverage you should have.
Your governing documents and state statutes will dictate the amount of coverage you should have.
JohnC46 (South Carolina)
Posts: 14,265
Posts: 14,265
Posted:
We are stand alone patio homes. One thing our Covenants has a clause where an owner must maintain their own insurance with the Association named as co-payee. This is so an owner cannot run away with claim money or not do a paid repair. Every once in awhile we get some insurance agent playing lawyer and saying we cannot do this. All it takes is a call from our lawyer and the insurance agent makes it happen.
Also in the Covenants is if an owner does not maintain insurance, the Association can buy a policy for them and bill them. That said, we have no way of knowing if an owner has insurance.
Also in the Covenants is if an owner does not maintain insurance, the Association can buy a policy for them and bill them. That said, we have no way of knowing if an owner has insurance.
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